The party leader got the cheque because political parties did not officially exist

The controversy over the disposal of the Fianna Fail Party Leader's Allowance during the period when Charles Haughey was leader…

The controversy over the disposal of the Fianna Fail Party Leader's Allowance during the period when Charles Haughey was leader must raise in many minds the question as to why these payments are made personally to the leaders of parties rather than to the parties themselves.

The form these payments take is in fact an anachronistic survival from an earlier period in the State's history when political parties had no legal existence. Indeed, it was the rather utopian hope of some of the State's founders that there would be no structured parties in our parliament.

This did not mean that they envisaged a one-party state, but rather a no-party state! Sinn Fein, having achieved its objective, would disappear, and members of the Dail were then to work together in small informal groups, discussing legislation on its merits rather than in whipped blocs of deputies organised to support or oppose legislation.

It was, of course, an absurdly idealistic - and unrealistic - concept. In all parliamentary democracies, governments are formed with the support of organised parties - and are opposed, and in time replaced in power, by other organised parties.

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Yet, in several ways, this curious concept of a no-party system seems to have had significant effects on the development of our politics.

First of all, it seems to have affected the way in which the pro-Treaty supporters acted in the State's early years. During the Civil War the pro-Treaty Dail members were not an organised group.

It was only in April 1923 that they brought together some of their supporters throughout the country to form Cumann na nGaedheal. But, organised from the top down rather than from the bottom up, Cumann na nGaedheal did not become an effective political party.

In the early years it was constantly at odds with the government that it was supposed to support. It was hostile to many of that government's efforts to place the new administration on a sound footing - seeking the replacement of experienced officials by government supporters and advocating an aggressive approach to Northern Ireland.

Ministers were frequently hauled before it to be upbraided for their handling of these and other issues. And it proved incapable of raising funds to finance the party or of contesting by-elections, two of which were lost in 1924.

A year later, faced with the defection of nine of their deputies after the Army mutiny, Government Ministers themselves, with the aid of some outside supporters, had to raise funds and organise on the ground. And on this amateur basis they won all nine ensuing by-elections - effectively without the aid of their own party.

Of course matters improved. But, in contrast to Fianna Fail, which was built from the ground up in the late 1920s, Fine Gael - as the party eventually became after merging with other groups - remained weak in organisation for over 50 years. It was, indeed, for this reason that when I became leader in 1977 I put so much effort into building a party organisation that would be capable of meeting Fianna Fail on equal terms.

Thus, the initial disdain of some of the State's founders for political parties had long-term effects on the balance of our political system, contributing from the late 1940s onwards to the need for coalitions comprising or built around two parties, Fine Gael and Labour, to break what might otherwise have become a virtual monopoly of power by a highly organised and tightly disciplined Fianna Fail.

But the anti-party bias of some of the State's first leaders had another effect, to which our attention has this week been drawn in extraordinary circumstances. The electoral law they enacted in 1923 simply did not recognise the existence of parties.

For 40 years thereafter, ballot papers merely listed the names of candidates, leaving voters to work out for themselves to which party each belonged!

The fact that political parties had no legal recognition posed a problem for legislators in 1938. In that year, legislation increased TDs' pay from £360 p.a. (£15,000 a year in today's money), to £480 (£20,000 at today's prices), and also introduced ministerial pensions of up to £500 a year. (When in 1937, after 24 years spent in the national movement, in government and in opposition in the Dail, my father lost his seat, he had been left without any income of his own. Presumably in intelligent anticipation of that event, we had moved some months earlier to a smaller house).

But this 1938 legislation also sought to provide some financial assistance to the opposition parties, in order to assist them to carry out their parliamentary duties. However, in implementing this the draftsman faced a problem. How was this to be done when parties had no legal existence?

The solution found was a fudge: even though the money could not be paid to parties that did not exist, it could be paid to people who were informally recognised in the Dail to be leaders of these ghostly entities.

And so it was that there came into existence the allowance of non-taxable expenses payable in connection with their parliamentary duties to the leaders of the Fine Gael and Labour parties of that time. The amount then set aside for these two leaders was £800 a year (just over £30,000 in today's money).

In 1963 our electoral law was radically revised - a process that involved not merely the repeal of such ancient legislation as the Freedom of Elections Act 1275, and the Problem of Carrying Arms to Parliament Act 1313, but also a system of registering political parties.

It was this new arrangement that made it possible for party names to appear on ballot papers. But no one seems to have thought of taking that opportunity to amend the Leader's Allowance provision of the 1938 Act to make these sums payable to the parties rather than their leaders. Over the years these Opposition Leader's Allowances were increased, the figure for single-party Opposition being eventually raised to £176,000 in 1983 - about £260,000 in today's money terms, or almost nine times the value of the original provision. Since 1973, Government parties also receive similar allowances, at a somewhat lower level.

When this legislation was originally enacted almost 60 years ago it clearly never struck anyone that a party leader might have his or her own ideas about what to do with these funds. It certainly struck no one that a political party would not come to an agreement with its leader on the uses to which the money should be put.

Of course it may be the case that there was an agreement between Charles Haughey and his party, although if that were the case, one might have expected Fianna Fail to have said so before now. Instead we have been hearing of possible internal party inquiries.

But it should in fairness be said that it cannot be excluded that some or all of these funds were used by Mr Haughey to pay staff, for there seems to be reason to believe he employed his own staff separately from those employed by the party - odd though such an arrangement may appear to an outsider.

Finally, it should be added that one of the uses to which part of these monies may properly be put is, of course, the payment by the party of a salary to its leader, who, in the nature of his job, can have no other earnings.

Thus, immediately after my election as Fine Gael leader, the front bench proposed that I be paid out of party funds into which the Leader's Allowance was paid, the equivalent of a ministerial salary. I think a similar, although not necessarily identical arrangement, has also applied in other parties.

But clearly there is a case for this funding to be placed on a better footing by future legislation, which could provide that these allowances be paid to registered political parties rather than to named individuals who are their current leaders.

This would remove any room for doubt that may exist under arrangements now as to how party leaders should handle these monies, which currently take the form of cheques made out personally to them.

There remains the quite separate question of the funding of political parties, as distinct from their parliamentary activities.

Against the background of recent events, Fianna Fail may now wish to reconsider its decision, announced during the election campaign, to abandon the proposed state funding of parties, which under Part III of the Electoral Act 1997, is due to come into effect on January 1st next.

Given that Fianna Fail supported the enactment of this Bill, its decision to repeal this part of it was surprising and puzzling. This reversal of position may, of course, have reflected Progressive Democrat pressure, who all along have opposed state funding and whose right-wing stance on a number of issues may have ensured them disproportionate business support.

But if the provision for state financing were to be repealed, recent events, in conjunction with the new disclosure provisions with regard to donations, might leave Fianna Fail and the PDs, as well as the Opposition parties, very short of the finances needed to support their party organisations and to contest future elections.

Moreover, the Independents, upon whom the Government relies, might be reluctant to vote to repeal a provision which offers them £5,000 each towards their re-election expenses. And the Sinn Fein deputy might be reluctant to vote down a provision which, had it been in force during the recent election, could have brought that party almost £90,000.

Altogether, a Government rethink of this decision might be wise.